Accounting Standard -9 Recognition of Rverenue from Sales

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Ananth Iyer (Querist)

08 July 2010 As per AS-9 para 11 there are conditions which should be satisfied for recognition of revenue from Sale of Goods. Conditions are that all risks and rewards attached to the goods should be transffered to the buyer and effective pocession should exist with the buyer except the case where the delivery is pending on buyers reqest and collection of revenue against goods is certain.
In my case sales are done at CIF basis. All the liability and risks etc attached to goods are borne by seller upto dilivery. The goods are dilivered to the destination by the buyer by hiring a transporter. The buyer recoganises purchase only when goods are dilivered at the desired destination.
Few despathes were made near the close of Financial Year (on 29th , 30th and 31st of march 2010) which were recieved by the buyer after 31.03.2010.
My query is - When should i book my sales?
1. At the time of dispatch, or
2. At the time of reciept of goods by the buyer.
Please forward me any decided case law. (if there is any)
My id is ananthdel@gmail.com

CA SMR

CA SMR (Expert)

08 July 2010 The following illustrations may answer your query.
Illustrations
These illustrations do not form part of the Accounting Standard. Their purpose is to illustrate the application of the Standard
to a number of commercial situations in an endeavour to assist in clarifying application of the Standard.
A. Sale of Goods
1. Delivery is delayed at buyer's request and buyer takes title and accepts billing
Revenue should be recognised notwithstanding that physical delivery has not been completed so long as there is every expectation that delivery will be made. However, the item must be on hand, identified and ready for delivery to the buyer at the time the sale is recognised rather than there being simply an intention to acquire or manufacture the goods in time for delivery.
2. Delivered subject to conditions
(a) installation and inspection i.e. goods are sold subject to installation,inspection etc.Revenue should normally not be recognised until the customer accepts delivery and installation and inspection are complete. In some cases, however, the installation process may be so simple in nature that it may be appropriate to
recognise the sale notwithstanding that installation is not yet completed (e.g. installation of a factory-tested television
receiver normally only requires unpacking and connecting of power and antennae).
(b) on approval
Revenue should not be recognised until the goods have been formally accepted by the buyer or the buyer has done an act
adopting the transaction or the time period for rejection has elapsed or where no time has been fixed, a reasonable time has elapsed.
has elapsed.

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